Tellabs Q1 2011 revenue declines 15 percent; sees potential in the mobile Internet segment

Tellabs' (Nasdaq: TLAB) Q1 2011 results once again illustrated the ongoing revenue struggles the vendor saw across its three main segments--broadband, transport and services.

During the first quarter, Tellabs reported $322.4 million in revenue, down from $379.2 million in Q1 2010, a factor it attributes to declines in all of its units.

"While international revenue grew 40 percent from a year ago, lower revenue in North America drove Tellabs' first-quarter results," said Rob Pullen, Tellabs president and chief executive officer in the earnings release.

Here's a breakdown of the company's key metrics:

  • Broadband/Data: Broadband segment revenue declined Broadband segment revenue was $173 million, down from $191 million in Q1 2010. Declines in data and managed access products were slightly offset by a rise in access product revenue. Data product revenue was $106.5 million in the first quarter of 2011, a decline from the $130.7 million it reported in Q1 2010.
  • Transport: Transport segment revenue was $99 million, down from $127.4 million in Q1 2010. A rise in optical transport system revenue was offset by expected revenue declines in its traditional digital cross-connect systems.
  • Services: Services segment revenue was $50 million, down from $60.7 million in Q1 2010. Tellabs attributes the decline in service revenue to lower deployment services in North America.

Looking ahead to Q2, Tellabs has forecast Q2 2011 revenue to be between $325 million to $345 million.

However bleak the immediate outlook is, Tellabs believes its longer-term vision to focus on the mobile Internet market will eventually pay off.

"Going forward, we will continue to invest in the smart mobile Internet through increased R&D spending to position Tellabs for long-term growth."

Although Tellabs has been a major player in the wireless backhaul market, in the past year it has increased (R&D) investment by 16 percent year over year to $80 million, or 25 percent of first-quarter revenue. The vendor's increased R&D budget around mobile Internet was coupled with two key acquisitions of both Zeugma's Intellectual Property and packet core vendor WiChorus.

For more:
- see the earnings release (PDF)

Related articles:
Competition eats into Tellabs Q4 earnings
Tellabs acquires Zeugma to enhance its mobile core capabilities
Tellabs: Q3 revenue was up, but Q4 outlook disappoints analysts
Tellabs maintains status at AT&T

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